Smith is slated to be a restricted free agent this offseason. He's had a bumpy career in San Francisco, throwing 51 touchdowns and 54 interceptions in six seasons since being the No. 1 overall pick in the 2005 NFL Draft.
Despite his struggles, Harbaugh has consistently spoken highly of Smith this offseason when asked about San Francisco's cloudy quarterback situation.
Harbaugh made it clear on Tuesday that he wanted Smith back in an interview with NFL Network's Fran Charles.
"It's well documented, on record, that we very much want Alex Smith to be a 49er next year," Harbaugh said. "He really is a 49er in my mind, and hopefully in his mind he is a 49er. We look forward to him competing for that starting quarterback position next year."
Smith didn't seem likely to return after the end of a 2010 season in which he was shuffled in and out of the lineup under former coach Mike Singletary. But a January meeting with Harbaugh proved to be beneficial for both men, who reportedly hit it off.
Smith came out of the conversation excited about playing for an offensive-minded coach with a NFL quarterback pedigree. Harbaugh even gave Smith a copy of the new playbook during the brief period last month when the lockout was lifted, according to CSNBayArea.com.
The Niners drafted Colin Kaepernick in the second round of this year's draft. If Smith were to return, he could provide a buffer between the team's present and future while mentoring the young quarterback out of Nevada.
Harbaugh told NFL Network that Kaepernick has all the tools to be a productive quarterback at the next level.
"(He's a) spectacular athlete, (a) very strong throwing arm, wired like the All-American guy," Harbaugh said. "(He) takes a lot of pride in his own personal performance. A guy whose won coming from behind, and really changed that program for the better at Reno. All those things and more that we see in Colin."
Of course, Harbaugh's hands are tied in many ways until the league's labor issues are settled. He admitted it's made his job as a rookie NFL coach more difficult.
"There's a myriad of obstacles that are coming our way in this year of unchartered waters, and (we've) never been in this kind of situation before," he said. "Like everything in the National Football League at this competitive a level there are going to be obstacles, things you have to overcome, things you must overcome. We're working every single day here in the office chasing that glory."